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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
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FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 1994
COMMISSION FILE NUMBER 1-5404
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
PARAMOUNT COMMUNICATIONS INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 74-1330475
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
15 COLUMBUS CIRCLE, NEW YORK, NEW YORK 10023-7780
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code 212-373-8000.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] . No [ ] .
At March 4, 1994, 122,787,610 shares of the registrant's Common Stock, $1 par
value, were outstanding.
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PARAMOUNT COMMUNICATIONS INC.
INDEX
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PAGE
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PART I. FINANCIAL INFORMATION
Consolidated Statement of Earnings --
Three Months and Nine Months Ended January 31, 1994 and 1993 . . . . . . . . . . . . . 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheet --
January 31, 1994 and April 30, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . 9
Consolidated Statement of Cash Flows --
Nine Months Ended January 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . 10
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 11
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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PARAMOUNT COMMUNICATIONS INC.
PART I. FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
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<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31 JANUARY 31
------------------ -----------------
1994 1993 1994 1993
---- ---- ---- ----
(IN MILLIONS, EXCEPT PER SHARE)
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REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,013.5 $ 943.7 $ 3,757.0 $ 3,210.1
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . 784.2 648.8 2,545.0 2,005.5
Selling, general and administrative expenses . . . . . . . . . . 281.6 293.1 914.0 884.5
--------- --------- --------- ---------
1,065.8 941.9 3,459.0 2,890.0
--------- --------- --------- ---------
OPERATING INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . (52.3) 1.8 298.0 320.1
Other income (expense) . . . . . . . . . . . . . . . . . . . . . 0.8 (1.5) (2.7) (1.5)
Interest and other investment income (expense) -- net
Interest expense . . . . . . . . . . . . . . . . . . . . . . (24.5) (24.2) (70.6) (78.2)
Interest and other investment income . . . . . . . . . . . . 19.7 22.7 53.1 87.0
--------- --------- --------- ---------
(4.8) (1.5) (17.5) 8.8
--------- --------- --------- ---------
EARNINGS (LOSS) BEFORE INCOME TAXES . . . . . . . . . . . . . . (56.3) (1.2) 277.8 327.4
Provision (benefit) for income taxes - Note A . . . . . . . . . . (19.7) (1.3) 97.2 101.8
--------- --------- --------- ---------
EARNINGS (LOSS) BEFORE EXTRAORDINARY ITEM AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE . . . . . . . . . . . . . . . . . (36.6) 0.1 180.6 225.6
Extraordinary item - Note D . . . . . . . . . . . . . . . . . . . (8.8)
Cumulative effect of accounting change - Note A . . . . . . . . . (66.9) (66.9)
--------- --------- --------- ---------
NET EARNINGS (LOSS) . . . . . . . . . . . . . . . . . . . . . . $ (36.6) $ (66.8) $ 180.6 $ 149.9
========= ========= ========= =========
Average common and common equivalent
shares outstanding . . . . . . . . . . . . . . . . . . . . . 120.3 118.8
Earnings (loss) per share
Earnings (loss) before extraordinary item and cumulative
effect of accounting change . . . . . . . . . . . . . . . $ (.31) $ .01 $ 1.50 $ 1.90
Extraordinary item . . . . . . . . . . . . . . . . . . . . . (.07)
Cumulative effect of accounting change . . . . . . . . . . . (.57) (.57)
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . (.31) (.56) 1.50 1.26
Cash dividends declared per common share . . . . . . . . . . . . .20 .20 .60 .60
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See notes to consolidated financial statements.
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PARAMOUNT COMMUNICATIONS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Paramount Communications Inc. operates in the entertainment and publishing
businesses. The following is a comparative summary of operating results for
the three and nine months ended January 31, 1994 and 1993 (in millions):
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THREE MONTHS ENDED JANUARY 31 NINE MONTHS ENDED JANUARY 31
-------------------------------------------- -----------------------------------------
OPERATING OPERATING
REVENUES INCOME (LOSS) REVENUES INCOME
--------------------- ------------------ ----------------- -------------------
1994 1993 1994 1993 1994 1993 1994 1993
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Entertainment . . . . . . $ 714.2 $ 639.6 $ 13.3 $ 51.8 $2,371.6 $1,888.7 $147.6 $166.5
Publishing . . . . . . . 299.3 304.1 (47.9) (32.8) 1,385.4 1,321.4 203.8 204.2
Corporate Expenses . . . (17.7) (17.2) (53.4) (50.6)
-------- ------- ------ ------ -------- -------- ------ ------
$1,013.5 $ 943.7 $(52.3) $ 1.8 $3,757.0 $3,210.1 $298.0 $320.1
======== ======= ====== ====== ======== ======== ====== ======
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ENTERTAINMENT
Entertainment segment revenues increased 12%, to $714.2 million from $639.6
million, and 26%, to $2,371.6 million from $1,888.7 million for the three and
nine months ended January 31, 1994, respectively, compared with the same
prior-year periods. Operating income declined 74% and 11% for the three and
nine months ended January 31, 1994, respectively, compared with the same
prior-year periods. Results for the current nine-month period included
significant seasonal contributions from Paramount Parks, the Company's theme
park operations, which were acquired in the fall of 1992.
Features
Revenues from features increased 32%, to $358.4 million from $271.4
million, and 13%, to $941.1 million from $834.7 million in the three and nine
months ended January 31, 1994, respectively, compared with the same prior-year
periods. Theatrical revenues increased 94% and 58% for the current three- and
nine-month periods, respectively. The current quarter's increase was led by
the performance of The Firm and Sliver internationally along with Addams Family
Values and Wayne's World 2 domestically; additionally, the current nine-month
period benefited from the domestic performance of The Firm and Sliver and the
success of Indecent Proposal in the domestic and international theatrical
markets. Home video revenues increased 69% and 4% for the current three- and
nine-month periods, respectively, led by the domestic videocassette releases of
The Firm and Sliver, the continued foreign and, in the current nine months,
domestic success of Indecent Proposal, Patriot Games and Boomerang and
increased sales from library sell-through promotional programs, which were
partially offset in the current nine months by the absence of a significant
sell-through title included in the same prior-year period. Pay cable revenues
declined 37% and 23% for the current three- and nine-month periods,
respectively, because of a weaker mix of newly available titles compared with
the same prior-year periods. Revenues from network and domestic and
international syndication sales of features' product fell 33% and 5% for the
three and nine months ended January 31, 1994, respectively, because of fewer
titles available for network broadcast.
Features generated operating income for the three months ended January 31,
1994, compared with a loss for the comparable prior-year period, while
operating income declined 24% for the current nine-month period. Theatrical
results improved in the current three months primarily because of contributions
from the international success of The Firm and Sliver. In the nine months
ended January 31, 1994, theatrical results declined slightly because of higher
feature write-downs primarily related to the releases of Coneheads, Searching
for Bobby Fischer, The Thing Called Love, Flesh and Bone, Addams Family Values
and Bopha!, which were partially offset by contributions from Indecent Proposal
and The Firm. In addition, results for the current periods were negatively
impacted by higher scenario reserves related to increased development activity.
Home video operations registered significantly higher operating income in the
current quarter due to increased revenues and greater profitability on new
releases, however, results declined in the current nine-month period because of
a less profitable mix of titles. Pay cable results declined in the current
three-month period because of lower revenues and a less profitable mix of
titles, but increased slightly in the current nine months primarily because of
an improved overall profit rate on library titles. Operating income from
network features and domestic and international features syndication decreased
in the current quarter on lower revenues but increased in the current nine
months because of a more profitable mix of titles.
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PARAMOUNT COMMUNICATIONS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Television
Television programming revenues increased 5%, to $179.0 million from $170.4
million, and 24%, to $630.5 million from $506.5 million in the three and nine
months ended January 31, 1994, respectively, compared with the same prior-year
periods. Revenues from network series product declined slightly in the current
quarter, but increased 48% in the current nine months. Contributions from
higher network license fees driven by increased series production were more
than offset in the quarter and partially offset in the current nine months by
the absence of license fees for the final season of Cheers, which were
recognized in the same prior-year periods; the current nine months also
benefited from basic cable sales of Wings and increased syndication sales of
network library titles. Revenues from first-run series product increased 21%
and 15% for the current three- and nine-month periods, as contributions from
Star Trek: Deep Space Nine and Leeza and increases from Star Trek: The Next
Generation and Hard Copy more than offset lower revenues from The Arsenio Hall
Show.
Television programming operating income declined 78% and 42% in the current
three and nine months ended January 31, 1994, respectively. Results from
network series product fell significantly in the current periods because of
lower profitability on the mix of shows available and increased investment in
new programming. First-run series product operating income declined, as higher
revenues were more than offset by increased investment in new programming.
Station and Network
The Station and Network group posted an operating loss for the three months
ended January 31, 1994 compared with operating income for the same prior-year
period, and a 61% decline in operating income for the current nine-month
period. Paramount Stations Group registered significantly higher profits
principally due to an increase in revenues for the current quarter and nine
months of 37%, to $55.9 million from $40.9 million, and 24%, to $152.5 million
from $123.1 million, respectively, because of contributions from the September
1993 acquisition of WKBD-TV in Detroit as well as higher advertising sales.
USA Networks, the Company's 50%-owned cable operations, generated operating
losses in the current-year periods compared with operating income in the same
prior-year periods. The sharply lower results were due largely to a
$78-million pre-tax charge at USA Network, the majority of which was recorded
in December 1993, to adjust the carrying value of certain broadcast rights to
net realizable value because of the under performance of certain series
programming, of which the Company recorded its share. The current periods also
included continued start-up costs incurred for the Sci-Fi Channel.
Theaters
Theatrical exhibition revenues decreased 16%, to $41.9 million from $50.1
million, and 1%, to $132.7 million from $134.5 million for the three and nine
months ended January 31, 1994, respectively. Revenues at Famous Players, the
Company's Canadian chain, decreased 11% in the current three months due to
lower attendance, and 2% in the current nine months because attendance gains
driven by improved product were more than offset by unfavorable exchange rates.
Operating results at Cinamerica, the Company's 50%-owned domestic theater
operation, decreased in the current periods because of lower attendance and the
absence of gains on the sale of theaters recorded in the prior-year periods,
which were partially offset by higher average ticket prices in the current
quarter and lower operating expenses in the current nine-month period.
International theater operations, which are primarily jointly-owned, recorded
higher operating income, principally because of increased attendance levels at
all locations. Overall theatrical exhibition operating income declined 60% for
the current quarter but increased 24% for the current nine months.
Madison Square Garden
Revenues for Madison Square Garden increased by 10%, to $103.3 million from
$94.2 million, and 14%, to $224.1 million from $197.3 million in the current
three- and nine-month periods, respectively. The sports teams' revenues
increased 17% in the current quarter and 21% in the current nine months, led by
greater Knickerbockers ticket sales generated by higher attendance and ticket
prices, as well as higher NBA merchandising revenues; revenues for the Rangers
increased slightly in the current nine-month period due to the receipt of
expansion revenues, partially offset by the absence of playoff revenue. The
current periods also included higher revenue from an increased number of live
entertainment events in the Arena and The Paramount, increased MSG Network
subscriber levels and advertising sales and greater concession revenues, but
were negatively impacted in the current nine months by the absence of revenues
from the Democratic National Convention recognized in the same prior-year
period.
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PARAMOUNT COMMUNICATIONS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Operating income increased 74% in the current quarter and operating losses
decreased 75% for the nine months ended January 31, 1994. The current periods
included higher concession income and increased profits at MSG Network because
of the increase in revenues, which were partially offset by an increase in
programming and operating expenses in the current nine months. These results
were partially offset by a decrease in operating income from the sports teams,
where higher team compensation and operating expenses exceeded revenue gains
achieved.
Paramount Parks
Revenues for Paramount Parks, which were acquired in several transactions
during the quarters ended October 31, 1992 and July 31, 1993, increased to
$301.7 million in the current nine months from $60.1 million in the same
prior-year period. Operating income increased in the nine months ended January
31, 1994 reflecting the inclusion of a full nine months of operations versus a
partial six months in the prior year. Operating income for the current quarter
included modest seasonal losses that approximated those in the same prior-year
quarter; certain other expenses incurred in the current off-season quarter to
prepare the theme parks for the operating season have been deferred and will be
amortized over the subsequent operating season, which generally begins in March
and ends in October.
PUBLISHING
Publishing revenues decreased 2% in the three months ended January 31,
1994, to $299.3 million from $304.1 million, but increased 5%, to $1,385.4
million from $1,321.4 million, for the nine months ended January 31, 1994,
compared with the same prior-year periods. Publishing operations, which
traditionally record profits in the quarters ended July 31 and October 31,
posted 46% higher operating losses for the three months ended January 31, 1994
compared with the prior-year quarter, while operating income for the nine
months ended January 31, 1994 approximated the prior-year nine-month period.
Consumer
Revenues increased 22%, to $90.2 million from $74.1 million, and 11%, to
$325.5 million from $294.3 million, in the current three- and nine-month
periods, compared with the same prior-year periods. These increases were
primarily due to contributions from frontlist hardcover titles at the Simon &
Schuster trade division and at Pocket Books along with increased frontlist
paperback sales at Pocket Books, and in the current three months because of
higher backlist hardcover sales at the trade division. Additionally, the
current-year periods benefited from higher sales from the audio releases of
successful consumer group titles, and higher international revenues partially
offset by weaker frontlist and backlist demand for reference and children's
books.
Consumer publishing operating losses decreased 24% in the current quarter,
while operating income rose 57% in the current nine months as increased
revenues were partially offset by increased product development and operating
expenses in the current three- and nine-month periods, along with higher
product support expenses in the current quarter.
Business, Technical and Professional
Revenues declined 8% for the quarter, to $66.5 million from $72.5 million
in the prior-year quarter, while the current nine-month revenues decreased 5%,
to $235.6 million from $248.8 million in the prior nine-month period. Lower
sales of multimedia programs and video products were partially offset by
increased sales of computer hardware and software instruction books.
Additionally, the current quarter benefited from increased sales of tax and
professional books and publications, while the current nine months reflected
lower sales of these products along with increased sales from self-improvement
products and higher revenues from business seminars.
Operating losses increased significantly in the current three months, while
operating income decreased 80% in the current nine months because of lower
revenues and increased operating expenses. Additionally, the current
nine-month period reflects lower product development expenses and increased
product support expenses.
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PARAMOUNT COMMUNICATIONS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Education
Revenues decreased 13% in the current three months, to $112.9 million from
$130.5 million, but increased 6%, to $707.8 million from $664.8 million for the
nine months ended January 31, 1994, compared with the same prior-year periods.
Elementary education revenues declined 23% for the quarter, to $15.6 million
from $20.2 million in the prior-year quarter, while the nine month revenues
increased 2%, to $237.4 million from $232.2 million in the prior nine-month
period. The current-year periods were impacted by lower sales of puzzles and
manipulatives along with decreased sales from educational video products.
Sales increased, however, in the current nine months primarily because of
increased adoption opportunities and the introduction of new reading, social
studies and religion products, along with higher sales of multicultural and
phonics programs. Secondary education revenues rose 8%, to $8.5 million in the
current quarter from $7.9 million in the prior-year quarter, while the current
nine-month revenues rose 17%, to $141.4 million from $120.6 million in the
prior nine-month period. The increased revenues are primarily attributable to
the success of the latest program releases, including science products in the
current three- and nine-month periods, along with the latest language arts and
social studies products in the current nine-month period. Revenues at higher
education decreased 16%, to $78.2 million in the current quarter from $93.4
million in the prior-year quarter primarily because of volume-incentive
programs offered in the three months ended October 31, 1993 which resulted in a
shift of bookstore orders into the second quarter along with lower sales of
business, economics and accounting textbooks, as compared with the prior-year
periods. Revenues for the current nine-month period increased slightly to
$262.8 million from $262.5 million in the prior nine-month period from improved
frontlist sales in the social science and education disciplines. Educational
technology revenues rose 18%, to $10.6 million from $9.0 million in the
prior-year quarter, while the current nine-month revenues increased 34% to
$66.2 million from $49.5 million in the prior nine-month period. The increased
revenues were primarily due to increased sales of computer learning stations,
in the current three and nine-month periods, and to sales of related software
products in the current nine months.
Operating losses increased 89% in the current three months as decreased
revenues and increased product development and operating expenses were
partially offset by lower product support expenses. In the current nine
months, operating income rose 15% as increased sales and lower operating
expenses were partially offset by increased product support and development
expenses.
International
Revenues of $34.3 million in the current quarter and $136.1 million in the
current nine months reflect an increase of 8% and 10%, respectively, as
compared with revenues of $31.8 million and $123.5 million, respectively, in
the prior-year three- and nine-month periods. Sales gains in Asia, the United
Kingdom and Mexico, largely attributable to increased adoptions and improved
sales of computer books, along with the acquisition of a German computer book
publisher were partially offset by decreased sales of educational products in
Canada.
Operating losses for the current quarter decreased 20%, while operating
income improved 12% in the current nine-month period as increased sales were
partially offset by increased product support and development and operating
expenses.
Additionally, publishing operations reflect lower corporate administrative
expenses in the current three-months, while these expenses were higher in the
current nine-month period.
INTEREST AND OTHER INVESTMENT INCOME (EXPENSE) -- NET
Earnings for the current-year periods reflect net interest and other
investment expense of $4.8 million and $17.5 million, compared with net
interest and other investment expense of $1.5 million for the prior-year
three-month period and net interest and other investment income of $8.8 million
in the prior-year nine-month period. This decrease stems primarily from lower
interest and other investment income because of lower average cash equivalents
and short-term investments and interest rates. The lower average cash
equivalents and short-term investments were primarily a result of acquisitions
and the funding of the working capital requirements of the Company. The
decrease in interest and other investment income was partially offset by lower
interest expense in the current-year nine-month period, which included lower
effective interest rates on the Company's debt.
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PARAMOUNT COMMUNICATIONS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OTHER
The effective rate for income taxes was 35% in the nine months ended
January 31, 1994 compared with a 31.1% rate (as restated - see below) for the
comparable prior-year period. The increase is the result of the amount of
foreign income subject to tax at lower foreign rates as a percentage of total
worldwide income and increases in income subject to federal, state and local
income taxes. Corporate expenses for the current-year periods include costs
related to the start-up of the Paramount Technology Group, a new business unit
responsible for the integration of emerging technologies, including new product
development, throughout the Company's entertainment and publishing operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company depended primarily on internal cash flow and external
borrowings to finance its operations during the nine months ended January 31,
1994, and expects to continue to do so. In connection with the tender offers
and merger proposals described in Note B to the consolidated financial
statements, the Company has discontinued its regular quarterly dividend
payment.
In May 1993, the Company purchased the remaining 80% it did not own of
Canada's Wonderland, Inc., later renamed Paramount Canada's Wonderland, Inc., a
Canadian theme park, for approximately $52 million. The Company subsequently
liquidated Paramount Canada's Wonderland debt obligations of approximately $31
million. In September 1993, the Company purchased television station WKBD-TV
in Detroit from Cox Enterprises Inc. for approximately $105 million. In
February 1994, the Company acquired Macmillan Publishing Company and certain
other assets of Macmillan Inc., a leading book publisher, for approximately
$553 million.
The Company and BHC Communications, Inc., which is majority-owned by
Chris-Craft Industries, Inc., are forming a joint venture to be known as the
Paramount Television Network which will provide prime-time television
programming primarily to broadcast affiliates nationwide in competition with
the three major networks and the Fox Broadcasting Network. The network is
expected to begin operations in January 1995.
In July 1993, the Company redeemed $100 million of 8 1/2% senior notes due
1996. Also, in July 1993, the Company completed a public offering of $150
million of 5 7/8% senior notes due 2000 and $150 million of 7 1/2% senior
debentures due 2023. A portion of the net proceeds was used to refinance the
previously mentioned redemption of the Company's 8 1/2% senior notes. The
remainder of such proceeds was used to fund the acquisitions of television
station WKBD-TV in Detroit and the remaining 80% interest in Paramount Canada's
Wonderland theme park. Total debt as a percentage of total capitalization
increased from 17% at April 30, 1993 to 19% at January 31, 1994. In the past,
the Company has been able to increase its borrowings as required and expects to
be able to continue to do so.
Trade receivables increased at January 31, 1994, compared to April 30, 1993
by 26%. Entertainment receivables increased principally because of the
recognition of domestic syndication contracts for major television programs in
the fall season along with videocassette sales due to the holiday season and
significant current releases. In publishing, receivable balances were higher
at educational publishing, due to the prior quarters being the peak selling
seasons, and at consumer publishing from recent frontlist and holiday season
sales.
The balance sheet at January 31, 1994, reflects the acquisitions of the
remaining 80% interest in Paramount Canada's Wonderland theme park and
television station WKBD-TV in Detroit, which contributed to changes in certain
balance sheet accounts as compared to April 30, 1993.
ACCOUNTING CHANGES
Effective November 1, 1992, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." This statement requires that the projected
future cost of providing postretirement benefits, such as health care and life
insurance, be recognized as an expense as employees render service instead of
when the benefits are paid. The Company's previous practice was to recognize
the cost of such postretirement benefits when paid.
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PARAMOUNT COMMUNICATIONS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company elected to record the cumulative effect of the accounting
change as a charge against income as of November 1, 1992, resulting in a
one-time charge of $66.9 million, net of income taxes of $34.5 million, or $.57
per share.
In February 1992, the Financial Accounting Standards Board (FASB) issued
SFAS No. 109, "Accounting for Income Taxes." Effective May 1, 1993, the
Company adopted the provisions of this standard by restating its prior period
financial statements beginning November 1, 1988. The effect of adopting SFAS
No. 109 was an adjustment which increased earnings before extraordinary item
and cumulative effect of accounting change by $0.9 million ($.01 per share) and
$2.9 million ($.03 per share) for the three and nine months ended January 31,
1993, respectively. This adjustment also decreased net loss and increased net
earnings for the prior-year three- and nine-month periods, respectively.
Under SFAS No. 109, the liability method is used in accounting for income
taxes. Under this method, deferred tax assets and liabilities are determined
based upon differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. Prior to the adoption
of SFAS No. 109, income tax expense was determined using the deferred method.
Deferred tax expense was based on items of income and expense that were
reported in different years in the financial statements and tax returns and
were measured at the tax rate in effect in the year the differences originated.
EFFECTS OF ACCOUNTING FOR POSTEMPLOYMENT BENEFITS
In November 1992, the FASB issued SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," which is effective for the Company in the year ending
April 30, 1995. Under this statement, the cost of benefits provided to
employees after employment but before retirement is to be recognized in the
financial statements on an accrual basis during the service period of the
employee. It is expected that implementation of this statement will not have a
material impact on the financial statements of the Company.
ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES
In May 1993, the FASB issued SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," which is effective for the Company
in the year ending April 30, 1995. This statement sets forth the accounting
for certain investments in debt and equity securities based upon management's
ability and intent, at the time of purchase, to trade, hold to maturity or make
available for sale such investments. The effect of this statement at the time
of adoption will depend upon the Company's ability and intent with respect to
such investments.
EFFECTS OF BUDGET RECONCILIATION ACT OF 1993
In August 1993, the Budget Reconciliation Act of 1993 (the "Act") was
enacted into law. One of the provisions of the Act increased the corporate
income tax rate to 35% effective January 1, 1993. This increase, from the
previous 34% rate, had no material effect on the Company. The Company expects
to benefit from a section of the Act permitting tax deductions derived from the
amortization of certain intangible assets acquired after July 25, 1991, which
deductions have not previously been claimed on tax returns filed by the
Company. However, the Company believes that any tax benefits generated by the
amortization of intangible assets previously acquired by it will not be
material.
Furthermore, to the extent that the Company is affected by several other
provisions of the Act, the results should not be material.
-8-
<PAGE> 10
PARAMOUNT COMMUNICATIONS INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
JANUARY 31 APRIL 30
1994 1993
---- ----
(UNAUDITED) (NOTE)
(IN MILLIONS)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . $ 727.6 $ 372.6
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . 153.9 569.7
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,043.3 829.6
Inventories - Note E . . . . . . . . . . . . . . . . . . . . . . . . . . 625.2 617.3
Prepaid income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 180.2 131.7
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . 450.9 400.2
-------- --------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . 3,181.1 2,921.1
PROPERTY, PLANT AND EQUIPMENT
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252.7 210.8
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651.7 591.4
Machinery, equipment and other. . . . . . . . . . . . . . . . . . . . . . 705.4 606.9
-------- --------
1,609.8 1,409.1
Less allowance for depreciation . . . . . . . . . . . . . . . . . . . . 400.5 336.1
-------- --------
1,209.3 1,073.0
OTHER ASSETS
Investment in affiliated companies . . . . . . . . . . . . . . . . . . . 209.0 243.9
Noncurrent receivables and inventories - Note E . . . . . . . . . . . . . 786.3 689.8
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,567.9 1,517.5
Deferred costs and other . . . . . . . . . . . . . . . . . . . . . . . . 463.2 429.5
-------- --------
3,026.4 2,880.7
-------- --------
$7,416.8 $6,874.8
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt . . . . . . . . . . . . . . . . . . $ 10.4 $ 109.8
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . 150.1 194.7
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . 36.3 26.6
Accrued expenses and other . . . . . . . . . . . . . . . . . . . . . . 1,233.1 1,128.4
-------- --------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . 1,429.9 1,459.5
DEFERRED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 799.8 805.9
LONG-TERM DEBT, net of current maturities . . . . . . . . . . . . . . . . 1,000.3 707.3
STOCKHOLDERS' EQUITY
Common Stock, recorded at $1.00 par value; 600,000,000 shares
authorized; shares outstanding, 121,896,951 at January 31, 1994
(excluding 25,965,097 shares held in treasury) and 118,199,396 at
April 30, 1993 (excluding 29,665,980 shares held in treasury . . . . . 121.9 118.2
Paid-in surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . 894.3 712.8
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,191.4 3,082.5
Cumulative translation adjustments . . . . . . . . . . . . . . . . . . . (20.8) (11.4)
-------- --------
4,186.8 3,902.1
-------- --------
$7,416.8 $6,874.8
======== ========
Note: Derived from audited financial statements.
</TABLE>
See notes to consolidated financial statements.
-9-
<PAGE> 11
PARAMOUNT COMMUNICATIONS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JANUARY 31
-----------------------
1994 1993
---- ----
(IN MILLIONS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Earnings before extraordinary item and cumulative effect of accounting change . $ 180.6 $ 225.6
Non-cash expenses
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78.8 53.7
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . (53.3) (3.8)
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . 45.7 42.4
Amortization of pre-publication costs . . . . . . . . . . . . . . . . . . . . 74.6 76.9
Undistributed net earnings of unconsolidated affiliates . . . . . . . . . . . . (10.3) (18.7)
Theatrical and television inventories and broadcast rights
Gross additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (918.1) (670.2)
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 838.4 625.5
Decrease (increase) in network features and syndication licenses . . . . . . . . (36.0) 5.3
Increase in pre-publication costs . . . . . . . . . . . . . . . . . . . . . . . (62.0) (59.8)
Increase in trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . (214.2) (68.4)
Decrease in inventories (other than theatrical and television) . . . . . . . . 35.1 30.8
Increase in prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . (49.7) (77.5)
Increase (decrease) in trade accounts payable . . . . . . . . . . . . . . . . (47.1) 11.9
Increase in income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . 9.7 16.9
Increase in accrued expenses and other . . . . . . . . . . . . . . . . . . . . . 168.4 2.6
Other -- net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22.0) (80.4)
-------- --------
NET CASH FLOWS PROVIDED FROM OPERATING ACTIVITIES . . . . . . . . . . . . . 18.6 112.8
CASH FLOWS FROM INVESTMENT AND OTHER ACTIVITIES
Expenditures for property, plant and equipment (excluding
capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (111.8) (72.1)
Proceeds on disposal of property, plant and equipment . . . . . . . . . . . . . 5.1 7.2
Purchase price of acquired businesses (net of acquired cash) . . . . . . . . . . (166.8) (423.6)
Decrease (increase) in investment in affiliated companies . . . . . . . . . . . 30.1 (1.9)
Decrease in short-term and other investments . . . . . . . . . . . . . . . . . . 340.7 156.0
Decrease in investments maturing after one year . . . . . . . . . . . . . . . . 23.5
Decrease in notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 5.1
-------- --------
NET CASH FLOWS PROVIDED FROM (USED FOR) INVESTMENT AND OTHER ACTIVITIES . . 101.8 (305.8)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 298.8 246.7
Payments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . (140.1) (184.6)
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . (13.4)
Issuance of Common Stock (excluding grants to employees) . . . . . . . . . . . . 147.6 31.4
Acquisition of stock for the treasury . . . . . . . . . . . . . . . . . . . . . (68.8)
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (71.7) (70.9)
-------- --------
NET CASH FLOWS PROVIDED FROM (USED FOR) FINANCING ACTIVITIES . . . . . . . . 234.6 (59.6)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . 355.0 (252.6)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR . . . . . . . . . . . . . . . . . . 372.6 463.7
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . $ 727.6 $ 211.1
======== ========
</TABLE>
See notes to consolidated financial statements.
-10-
<PAGE> 12
PARAMOUNT COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- BASIS OF PRESENTATION
The accompanying consolidated financial statements of Paramount
Communications Inc. and its consolidated subsidiaries (Company) have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. The results of operations of any
interim period are subject to year-end audit and adjustments, and are not
necessarily indicative of the results of operations for the fiscal year. For
further information, refer to the consolidated financial statements and
accompanying footnotes included in the Company's transition report on Form 10-K
for the six months ended April 30, 1993, as amended.
Accounting Changes
Effective November 1, 1992, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." This statement requires that the projected
future cost of providing postretirement benefits, such as health care and life
insurance, be recognized as an expense as employees render service instead of
when the benefits are paid. The Company's previous practice was to recognize
the cost of such postretirement benefits when paid.
The Company elected to record the cumulative effect of the accounting
change as a charge against income as of November 1, 1992, resulting in a
one-time charge of $66.9 million, net of income taxes of $34.5 million, or $.57
per share.
In February 1992, the Financial Accounting Standards Board (FASB) issued
SFAS No. 109, "Accounting for Income Taxes." Effective May 1, 1993, the
Company adopted the provisions of this standard by restating its prior period
financial statements beginning November 1, 1988. The effect of adopting SFAS
No. 109 was an adjustment which increased earnings before extraordinary item
and cumulative effect of accounting change by $0.9 million ($.01 per share) and
$2.9 million ($.03 per share) for the three and nine months ended January 31,
1993, respectively. This adjustment also decreased net loss and increased net
earnings for the prior-year three- and nine-month periods, respectively.
Under SFAS No. 109, the liability method is used in accounting for income
taxes. Under this method, deferred tax assets and liabilities are determined
based upon differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. Prior to the adoption
of SFAS No. 109, income tax expense was determined using the deferred method.
Deferred tax expense was based on items of income and expense that were
reported in different years in the financial statements and tax returns and
were measured at the tax rate in effect in the year the differences originated.
NOTE B -- TENDER OFFERS AND MERGER PROPOSALS
On December 13, 1993, the Company's Board of Directors adopted procedures
(the "Bidding Procedures") for the purpose of considering proposals to acquire
the Company. Pursuant to the Bidding Procedures, from December 20, 1993
through February 1, 1994, Viacom Inc. (Viacom) and QVC Network, Inc. (QVC)
submitted a series of bids for the Company. After the initial round of
bidding, the Company entered into a merger agreement with QVC. Prior to the
February 1 bidding deadline established by the Bidding Procedures, Viacom
substantially increased its bid and the Company terminated the agreement with
QVC and entered into a merger agreement with Viacom.
On February 1, 1994, both Viacom and QVC submitted their final proposals
for the acquisition of the Company. Viacom's proposal consisted of a tender
offer (the "Viacom Offer") for 50.1% of the outstanding shares of the Company's
Common Stock (the "Shares"), on a fully diluted basis, at $107 per Share to be
followed by a merger (the "Viacom Second-Step Merger") in which each remaining
Share would be converted into the right to receive (i) 0.93065 shares of Viacom
Class B Common Stock, (ii) 0.93065 Contingent Value Rights, (iii) 0.5
three-year Warrants to purchase Viacom Class B Common Stock, (iv) 0.3 five-year
Warrants to purchase Viacom Class B Common Stock and (v) $17.50 in principal
amount of 8% exchangeable subordinated debentures of Viacom.
-11-
<PAGE> 13
PARAMOUNT COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QVC's proposal consisted of a tender offer (the "QVC Offer") for 50.1% of
the outstanding Shares, on a fully diluted basis, at $104 per Share to be
followed by a merger in which each remaining Share would be converted into the
right to receive (i) 1.2361 shares of QVC Common Stock, (ii) 0.2386 shares of a
new series of 6% cumulative non-convertible exchangeable preferred stock and
(iii) 0.32 ten-year Warrants to purchase QVC Common Stock.
At a meeting held on February 4, 1994, the Company's Board of Directors
recommended that stockholders accept the Viacom Offer and reject the QVC Offer.
At that time, the Company entered into an Amended and Restated Merger Agreement
with Viacom (the "Restated Viacom Merger Agreement").
As of midnight on February 14, 1994, approximately 74.6% of the outstanding
Shares, on a fully diluted basis, had been validly tendered pursuant to the
Viacom Offer and not withdrawn. As a result, pursuant to the Bidding
Procedures, on February 15, 1994 Viacom waived certain conditions to the Viacom
Offer and extended the offer until March 1, 1994 and QVC terminated the QVC
Offer. Immediately after midnight on March 1, 1994, all conditions to the
Viacom Offer were deemed to have been satisfied and Viacom accepted for payment
61,657,432, of the Shares validly tendered and not withdrawn pursuant to the
Viacom Offer.
Pursuant to the Restated Viacom Merger Agreement, a special meeting of the
Company's stockholders will be called to act on the Viacom Second-Step Merger.
The approval of holders of a majority of all outstanding voting shares of both
Viacom and the Company is required to approve the merger. The approval by
Viacom's stockholders is assured by means of a voting agreement between
Viacom's parent corporation and the Company. The approval by Paramount's
stockholders is assured since Viacom now owns a majority of the outstanding
Shares.
The Restated Viacom Merger Agreement also provides that consummation of the
Viacom Second-Step Merger is subject to certain customary conditions.
NOTE C -- ACQUISITION AND DISPOSITION OF BUSINESSES
In May 1993, the Company purchased the remaining 80% it did not own of
Canada's Wonderland, Inc., later renamed Paramount Canada's Wonderland, Inc., a
Canadian theme park, for approximately $52 million. In September 1993, the
Company purchased television station WKBD-TV in Detroit from Cox Enterprises
Inc. for approximately $105 million. In February 1994, the Company acquired
Macmillan Publishing Company and certain other assets of Macmillan Inc., a
leading book publisher, for approximately $553 million.
The Company and BHC Communications, Inc., which is majority-owned by
Chris-Craft Industries, Inc., are forming a joint venture to be known as the
Paramount Television Network which will provide prime-time television
programming primarily to broadcast affiliates nationwide in competition with
the three major networks and the Fox Broadcasting Network. The network is
expected to begin operations in January 1995.
In August and October 1992, the Company acquired Kings Entertainment
Company and Kings Island Company, respectively, later renamed Paramount Parks,
which own and operate regional theme parks, for a total of approximately $400
million.
During the periods ended January 31, 1994 and 1993, the Company also
acquired or sold certain other businesses. The contributions of these
businesses in the aggregate were not significant to the Company's results of
operations for the periods presented, nor are they expected to have a material
effect on the Company's results on a continuing basis.
NOTE D -- EXTRAORDINARY ITEM
In September 1992, the Company redeemed $175 million of 9 3/4% senior
debentures due 2016 for $1,061.25 per $1,000 principal amount. The premium
paid by the Company and the write-off of related unamortized discount and
issuance costs resulted in a loss of $8.8 million, net of an income tax benefit
of $4.6 million.
-12-
<PAGE> 14
PARAMOUNT COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE E -- INVENTORIES
Inventories are stated as follows (in millions):
<TABLE>
<CAPTION>
JANUARY 31 APRIL 30
1994 1993
---- ----
<S> <C> <C>
Current
Lower of cost or net realizable value
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 223.2 $ 248.3
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5 12.8
Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.3 29.5
-------- --------
260.0 290.6
Theatrical and television productions
Released . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222.0 176.9
Completed, not released . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.8 32.7
In process and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66.5 61.8
-------- --------
316.3 271.4
Broadcast rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.9 55.3
-------- --------
625.2 617.3
Noncurrent
Theatrical and television productions
Released . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120.1 155.3
In process and other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332.2 247.0
-------- --------
452.3 402.3
Broadcast rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116.3 107.0
-------- --------
568.6 509.3
-------- --------
$1,193.8 $1,126.6
======== ========
</TABLE>
-13-
<PAGE> 15
PARAMOUNT COMMUNICATIONS INC.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits --
4(a) -- Amendment No. 2, dated as of September 12,
1993, to Paramount Communications
Shareholder Rights Agreement, as amended
(Incorporated by reference to Amendment
No. 2 to Paramount Communications Form 8-A
on Form 8-A/A dated September 22, 1993).
4(b) -- Amendment No. 3, dated as of October 24,
1993, to Paramount Communications
Shareholder Rights Agreement, as amended
(Incorporated by reference to Amendment
No. 3 to Paramount Communications Form 8-A
on Form 8-A/A dated November 5, 1993).
4(c) -- Amendment No. 4, dated as of November 6,
1993, to Paramount Communications
Shareholder Rights Agreement, as amended
(Incorporated by reference to Amendment
No. 4 to Paramount Communications Form 8-A
on Form 8-A/A dated November 15, 1993).
4(d) -- Amendment No. 5, dated as of December 22,
1993, to Paramount Communications
Shareholder Rights Agreement, as amended
(Incorporated by reference to Amendment
No. 5 to Paramount Communications Form 8-A
on Form 8-A/A dated January 5, 1994).
4(e) -- Amendment No. 6, dated as of January 21,
1994, to Paramount Communications
Shareholder Rights Agreement, as amended
(Incorporated by reference to Amendment
No. 6 to Paramount Communications Form 8-A
on Form 8-A/A dated January 31, 1994).
4(f) -- Amendment No. 7, dated as of March 1,
1994, to Paramount Communications
Shareholder Rights Agreement, as amended
(Incorporated by reference to Amendment
No. 7 to Paramount Communications Form 8-A
on Form 8-A/A dated March 2, 1994).
*(10)(iii)(A)(1) -- Amendment dated as of February 11, 1994,
to the Amended and Restated Agreement
dated as of October 1, 1985 and restated
as of June 23, 1989 between Paramount
Communications and Martin S. Davis.
*(10)(iii)(A)(2) -- Amendment dated as of February 11, 1994,
to the Agreement dated as of January 12,
1993 between Paramount Communications and
Ronald L. Nelson.
*(10)(iii)(A)(3) -- Amendment dated as of February 11, 1994,
to the Amended and Restated Agreement
dated as of October 1, 1985 and restated
as of June 23, 1989 between Paramount
Communications and Donald Oresman.
(b) Reports on Form 8-K -- The following reports on Form 8-K were
filed during the three months ended January 31, 1994:
(i) The registrant filed a Current Report on Form 8-K, dated
January 4, 1994, in respect of the registrant terminating
the Amended and Restated Agreement and Plan of Merger with
Viacom Inc. and entering into an Agreement and Plan of
Merger with QVC Network, Inc. The items reported in such
Current Report were Item 5 (Other Events) and Item 7
(Exhibits).
(ii) The registrant filed a Current Report on Form 8-K, dated
January 28, 1994, in respect of the registrant terminating
the Agreement and Plan of Merger with QVC Network, Inc.
and entering into an Agreement and Plan of Merger with
Viacom Inc. The items reported in such Current Report
were Item 5 (Other Events) and Item 7 (Exhibits).
______________
* Filed herewith.
-14-
<PAGE> 16
PARAMOUNT COMMUNICATIONS INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PARAMOUNT COMMUNICATIONS INC.
Date: March 8, 1994 By: /s/ Ronald L. Nelson
-------------------------------
Ronald L. Nelson
Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
-15-
<PAGE> 17
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------- -----------
4(a) -- Amendment No. 2, dated as of September 12,
1993, to Paramount Communications
Shareholder Rights Agreement, as amended
(Incorporated by reference to Amendment
No. 2 to Paramount Communications Form 8-A
on Form 8-A/A dated September 22, 1993).
4(b) -- Amendment No. 3, dated as of October 24,
1993, to Paramount Communications
Shareholder Rights Agreement, as amended
(Incorporated by reference to Amendment
No. 3 to Paramount Communications Form 8-A
on Form 8-A/A dated November 5, 1993).
4(c) -- Amendment No. 4, dated as of November 6,
1993, to Paramount Communications
Shareholder Rights Agreement, as amended
(Incorporated by reference to Amendment
No. 4 to Paramount Communications Form 8-A
on Form 8-A/A dated November 15, 1993).
4(d) -- Amendment No. 5, dated as of December 22,
1993, to Paramount Communications
Shareholder Rights Agreement, as amended
(Incorporated by reference to Amendment
No. 5 to Paramount Communications Form 8-A
on Form 8-A/A dated January 5, 1994).
4(e) -- Amendment No. 6, dated as of January 21,
1994, to Paramount Communications
Shareholder Rights Agreement, as amended
(Incorporated by reference to Amendment
No. 6 to Paramount Communications Form 8-A
on Form 8-A/A dated January 31, 1994 ).
(10)(iii)(A)(1) -- Amendment dated as of February 11, 1994,
to the Amended and Restated Agreement
dated as of October 1, 1985 and restated
as of June 23, 1989 between Paramount
Communications and Martin S. Davis.
(10)(iii)(A)(2) -- Amendment dated as of February 11, 1994,
to the Agreement dated as of January 12,
1993 between Paramount Communications and
Ronald L. Nelson.
(10)(iii)(A)(3) -- Amendment dated as of February 11, 1994,
to the Amended and Restated Agreement
dated as of October 1, 1985 and restated
as of June 23, 1989 between Paramount
Communications and Donald Oresman.
<PAGE> 1
Amendment dated as of February 11, 1994, to the Amended and
Restated Agreement dated as of October 1, 1985 and restated as of June 23, 1989
(the "Agreement") between Paramount Communications Inc. (the "Company") and
Martin S. Davis (the "Executive").
WHEREAS, the Executive is employed pursuant to the Agreement
and was granted thereunder restricted shares of Paramount common stock (the
"Shares");
WHEREAS, the Shares are subject to transfer restrictions set
forth in the Agreement which will prevent the Executive from tendering such
Shares to Viacom Inc. ("Viacom") pursuant to its currently outstanding tender
offer for approximately 51% of the Company's common stock;
WHEREAS, the Company and the Executive wish to remove these
transfer restrictions but only to the extent required to permit Executive to
tender his Shares to, and only with respect to those Shares purchased for cash
by, Viacom pursuant to such offer;
NOW, THEREFORE, the Company and the Executive agree that
Section 11.2(b) of the Agreement shall be amended by adding the following
provisions at the end thereof:
Notwithstanding the foregoing, Shares may be tendered by Executive to
Viacom Inc. ("Viacom") pursuant to its tender offer, instituted prior
to February 11, 1994, for approximately 51% of the Shares of Company
common stock for cash; provided that any Shares not purchased by
Viacom for cash shall remain subject to the restrictions and other
terms and conditions set forth in this Agreement and any cash received
in exchange for Shares pursuant to such tender offer shall be free of
all restrictions.
IN WITNESS WHEREOF, the Company has caused this Amendment to
be executed and the Executive has executed this Amendment as of the date first
above written.
PARAMOUNT COMMUNICATIONS INC.
By:
-------------------------------
-------------------------------
Martin S. Davis
<PAGE> 1
Amendment dated as of February 11, 1994, to the Agreement
dated as of January 12, 1993 (the "Agreement") between Paramount Communications
Inc. (the "Company") and Ronald L. Nelson (the "Executive").
WHEREAS, the Executive is employed pursuant to the Amended and
Restated Agreement dated as of November 17, 1987 and restated as of June 23,
1989, as modified by an Amendment dated as of December 21, 1992 (the
"Amendment");
WHEREAS, pursuant to the Agreement, the Executive was granted
restricted shares of Paramount common stock (the "Shares") in consideration for
the extension of his employment term as set forth in the Amendment;
WHEREAS, the Shares are subject to transfer restrictions set
forth in the Agreement which will prevent the Executive from tendering such
Shares to Viacom Inc. ("Viacom") pursuant to its currently outstanding tender
offer for approximately 51% of the Company's common stock;
WHEREAS, the Company and the Executive wish to remove these
transfer restrictions but only to the extent required to permit Executive to
tender his Shares to, and only with respect to those shares purchased for cash
by, Viacom pursuant to such offer;
NOW, THEREFORE, the Company and the Executive agree that
Section 1.2(b) of the Agreement shall be amended by adding the following
provisions at the end thereof:
Notwithstanding the foregoing, Shares may be tendered by Executive to
Viacom Inc. ("Viacom") pursuant to its tender offer, instituted prior
to February 11, 1994, for approximately 51% of the Shares of Company
common stock for cash; provided that any shares not purchased by
Viacom for cash shall remain subject to the restrictions and other
terms and conditions set forth in this Agreement and any cash received
in exchange for Shares pursuant to such tender offer shall be free of
all restrictions.
IN WITNESS WHEREOF, the Company has caused this Amendment to
be executed and the Executive has executed this Amendment as of the date first
above written.
PARAMOUNT COMMUNICATIONS INC.
By:
-------------------------------
-------------------------------
Ronald L. Nelson
<PAGE> 1
Amendment dated as of February 11, 1994, to the Amended and
Restated Agreement dated as of October 1, 1985 and restated as of June 23, 1989
(the "Agreement") between Paramount Communications Inc. (the "Company") and
Donald Oresman (the "Executive").
WHEREAS, the Executive is employed pursuant to the Agreement
and was granted thereunder restricted shares of Paramount common stock (the
"Shares");
WHEREAS, the Shares are subject to transfer restrictions set
forth in the Agreement which will prevent the Executive from tendering such
Shares to Viacom Inc. ("Viacom") pursuant to its currently outstanding tender
offer for approximately 51% of the Company's common stock;
WHEREAS, the Company and the Executive wish to remove these
transfer restrictions but only to the extent required to permit Executive to
tender his Shares to, and only with respect to those Shares purchased for cash
by, Viacom pursuant to such offer;
NOW, THEREFORE, the Company and the Executive agree
that Section 10.2(b) of the Agreement shall be amended by adding the following
provisions at the end thereof:
Notwithstanding the foregoing, Shares may be tendered by
Executive to Viacom Inc. ("Viacom") pursuant to its tender
offer, instituted prior to February 11, 1994, for
approximately 51% of the Shares of Company common stock for
cash; provided that any shares not purchased by Viacom for
cash shall remain subject to the restrictions and other terms
and conditions set forth in this Agreement and any cash
received in exchange for Shares pursuant to such tender offer
shall be free of all restrictions.
IN WITNESS WHEREOF, the Company has caused this
Amendment to be executed and the Executive has executed this Amendment as of
the date first above written.
PARAMOUNT COMMUNICATIONS INC.
By:
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-------------------------------
Donald Oresman
